FISCAL NOTE

Date Requested: January 26, 2024
Time Requested: 06:10 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1766 Introduced HB5208
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to create an incentive for employers to hire people who are pursuing a formal program of recovery from substance abuse issues by allowing the employer to claim a tax credit for employing eligible individuals, with limits based upon the employer’s total number of employees overall. According to our interpretation, the proposed bill provides Personal Income Tax and Corporation Net Income Tax credits for eligible taxpayers who hire qualified individuals participating in a program of substance abuse recovery. A certified employer may claim a credit each year for up to seven eligible employees, depending on the total number of employees in the business entity. The maximum credit allowed would be $2,000 per eligible individual hired and retained in employment. The Tax Department cannot accurately estimate the number of eligible businesses that would qualify for this tax credit nor the amount of tax credit claimed in any given year due to the confidentiality of data on people in programs of substance abuse recovery. Additional administrative costs incurred by the State Tax Division would be $46,500 in FY 2025and $25,000 in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2024
Increase/Decrease
(use"-")
2025
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 46,500 25,000
Personal Services 0 25,000 25,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 1,500 0
Other 0 20,000 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


According to our interpretation, the proposed bill provides Personal Income Tax and Corporation Net Income Tax credits for eligible taxpayers who hire qualified individuals participating in a program of substance abuse recovery. A certified employer may claim a credit each year for up to seven eligible employees, depending on the total number of employees in the business entity. The maximum credit allowed would be $2,000 per eligible individual hired and retained in employment. The Tax Department cannot accurately estimate the number of eligible businesses that would qualify for this tax credit nor the amount of tax credit claimed in any given year due to the confidentiality of data on people in programs of substance abuse recovery. Additional administrative costs incurred by the State Tax Department would be $46,500 in FY2025 and $25,000 in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to create an incentive for employers to hire people who are pursuing a formal program of recovery from substance abuse issues by allowing the employer to claim a tax credit for employing eligible individuals, with limits based upon the employer’s total number of employees overall. The bill fails to include in its definition of “eligible taxpayer” the various entities identifying a “taxpayer” (i.e., person, firm, partnership, corporation). What constitutes “continued commitment to recovery” is subjective and could pose a problem. The bill is silent regarding who determines what constitutes “continued commitment to recovery.”



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov